1. Reporting Pensions
Under GASB 68
KASBO - Spring 2014
6/7/2014

2. KASBO - Spring 2014
6/7/2014

3. Pension debt
KASBO - Spring 2014
6/7/2014

4. Authority
GASB Statement 68 – Accounting and Financial Reporting for Pensions
GASB 68 Implementation Guide
Effective for fiscal year 2015
KASBO - Spring 2014
6/7/2014

5. Presenters
Mark Whelan, CPA Chief Financial Officer, Kentucky Teachers’ Retirement System Todd Coleman, CPA Controller, Kentucky Retirement System Susan Barkley, CPA Assistant Director, Kentucky Department of Education , ext 4437
KASBO - Spring 2014
6/7/2014

6. Terminology Old New Actuarial Accrued Liability (AAL)
Unfunded Actuarial Accrued Liability (UAAL)
Total Pension Liability (TPL)
Net Pension Liability (NPL)
KASBO - Spring 2014
6/7/2014

7. Key Changes
The part of total pension liability not covered by plan assets = net pension liability (NPL)
NPL is a liability on entity-wide statements
Changes in calculating NPL
Some components are expensed
Some are deferred outflows/inflows
KASBO - Spring 2014
6/7/2014

8. TPL – fair value of plan assets = NPL
KASBO - Spring 2014
6/7/2014

9. Actuarial Valuation Actuarial valuation will contain:
TPL
Components of change in NPL
Information needed for note disclosures
Proportionate share determined by actuaries or retirement plan
KASBO - Spring 2014
6/7/2014

10. Changes in NPL Most will be an expense in the period of the change
Service cost
Interest on TPL
Benefit changes
Projected earnings on pension plan investments
KASBO - Spring 2014
6/7/2014

11. Changes in NPL Some components are deferred outflow/inflow
Amortized over average of expected remaining service lives
Difference between expected and actual performance
Changes of assumptions
Change in proportionate share
Difference between proportionate share of all contributions and employer’s contributions
KASBO - Spring 2014
6/7/2014

12. Investment Earnings Amortized over 5 years only
Report net deferred outflow/inflow from this component
KASBO - Spring 2014
6/7/2014

13. Amortization Must track each component separately
Must track each year separately
Use the appropriate time period for each
KASBO - Spring 2014
6/7/2014

14. Expense over avg. remaining service period of actives and inactives
CHANGE COMPONENT FOR NPL
EXPENSE
DEFERRAL
Service cost
Immediately
None
Interest on the TPL
Projected investment earnings
Changes in benefit terms
Changes in assumptions
Initial period amount
Expense over avg. remaining service period of actives and inactives
Difference between assumed and actual economic and demographic factors
Difference between projected and actual earnings
Expense over 5 years
Other changes in NPL
KASBO - Spring 2014
6/7/2014

15. Special Funding Situation
Nonemployer contributing entity (state)
Legal requirement to contribute directly
Federal grants? No
Districts must record revenue and expense equal to its proportionate share of state contributions – change in NPL
KASBO - Spring 2014
6/7/2014

16. Fund Statements Nothing changes due to GASB 68 KASBO - Spring 2014
6/7/2014

17. Entity-wide Statements
NPL as a liability
On-behalf revenue for state contributions
Deferred outflows/inflows amortized (by function)
If the NPL change results in a net credit, use expense anyway, not revenue
KASBO - Spring 2014
6/7/2014

18. Enterprise Funds Full accrual basis
These funds show part of NPL and other stuff on their statements, too
KASBO - Spring 2014
6/7/2014

19. To Get Started in FY 15
Prior period adjustment on Statement of Activities
Need beginning of year NPL (at 7/1/14)
Dr. Net position (beginning)
Cr. Pension liability
Beginning deferred outflow/inflow can be $0 first year
KASBO - Spring 2014
6/7/2014

20. Note Disclosures Lots! Descriptive information about the plan
Significant assumptions in TPL
Changes of assumptions
Pension expense
Deferred outflows/inflows by component for this period and future periods
Proportionate share information
KASBO - Spring 2014
6/7/2014

21. RSI 10-year schedules Proportionate share Covered payroll
These build over time, can start FY 15 with one year
Proportionate share
Covered payroll
Plan net position as % of TPL
Show state and district shares
KASBO - Spring 2014
6/7/2014

22. OPEB Not included in scope of GASB 68
Will likely be addressed in a future standard
Districts will have to record it (amount paid for medical insurance fund)
KASBO - Spring 2014
6/7/2014

23. KASBO - Spring 2014
6/7/2014

24. Our Plans KTRS CERS Defined benefit
Cost-sharing multiple employer plan
Special funding situation
State will recognize 100% of NPL
Note disclosures req’d
Defined benefit
Cost-sharing multiple employer plan
NO special funding situation
Districts recognize proportionate share of NPL
Note disclosures req’d
KASBO - Spring 2014
6/7/2014

25. Looking Ahead CERS info will come from KRS actuaries
Expect a template to show proportionate share info January 2015
Use the FY 14 actuarial valuation for the district FY 15 financial statements
KASBO - Spring 2014
6/7/2014